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Issues Involved:
1. Act of Insolvency 2. Limitation and Acknowledgment of Debt 3. Prematurity of the Claim 4. Ability to Pay Debts 5. Adjudication of Partners as Insolvents Detailed Analysis: 1. Act of Insolvency The appellants were adjudged insolvents under the impugned order, finding that under the law, a firm can also be adjudged insolvent upon the requisite conditions being satisfied. The respondents before the Insolvency Judge were found to be creditors, and it was also found that the appellants had committed an act of insolvency inasmuch as the immovable properties had been sold in execution of a decree within three months immediately preceding the petition. This sale in execution of the decree against the firm constitutes an act of insolvency against the firm and its partners within the meaning of Section 6(e) of the Act. 2. Limitation and Acknowledgment of Debt The appellants contended that the return of the deposits made with them was barred by limitation. The acknowledgment could not avail the respondent creditors. However, from the material placed on record, it appeared that Kailash Chand, one of the partners, acknowledged and admitted the deposits in writing under his signature on multiple occasions. The contention for the appellants that there was no acknowledgment as required by Sections 18/20 of the Limitation Act, 1963, was not devoid of force. However, the absence of acknowledgment duly made under Sections 18/20, Limitation Act, 1963, was not of consequence because limitation is governed by Article 22 and not Article 21 of the Schedule to this Act. The limitation is governed under Article 22 of the Limitation Act, 1963. The demand in this case having been made in July 1971, the petition was thus within limitation. 3. Prematurity of the Claim The appellants argued that the claim of the respondent-creditors for the return of the deposits was premature. This argument was based on the last endorsement dated May 30, 1967, appearing on the Fixed Deposit receipts and the endorsement dated March 28, 1967, and May 30, 1966, on the Current Deposit and the Savings Bank Account Pass Books respectively. However, the stipulation that the payment shall be in 16 years from the termination of insolvency may amount to the endorser executing a bond to that effect, and this required that requisite stamp be affixed. The provision contained in Section 9(1)(b) of the Act furnishes a complete answer to the submission for the appellants in this behalf. Clause (b) of Section 9(1) is attracted equally where such a sum is payable at some certain future time. The petition cannot, therefore, be objected to as premature. 4. Ability to Pay Debts The appellants argued that they were possessed of immovable properties worth several lacs and hence they could not be adjudged insolvents for nonpayment of paltry sums. However, the heavy outstandings against the appellants, including Rs. 23.50 lacs towards income tax and various other dues, indicated that the appellants could not satisfy the court that they were able to pay their debts. As provided in Section 6(e) of the Act, a debtor commits an act of insolvency "if any of his property has been sold in execution of the decree of any court for the payment of money," provided further that as required by Section 9(1)(c), the act of insolvency on which the petition is grounded has occurred within three months before the presentation of the petition. 5. Adjudication of Partners as Insolvents The last submission was that Smt. Madan Sundari (the widow of Chander Sen) could not be adjudged insolvent. It was argued that she relinquished her interest in favor of the surviving partners. However, upon the death of her husband, Smt. Madan Sundari was also taken in as a partner. The alleged relinquishment of the interest as a partner on her part was not substantiated by reliable evidence, and the Insolvency Judge did not err in finding accordingly. Conclusion: To sum up, it is established that: (i) The appellants committed an act of insolvency within the meaning of Section 6(e) of the Act. (ii) The act of insolvency took place within three months preceding the petition as required under Section 9(1)(c) of the Act. (iii) The aggregate amount of the debt exceeds Rs. 500/-. (iv) The debt, which is liquidated, is payable in any case at an ascertainable future date if not immediately, as contemplated under Section 9(1)(b) of the Act. (v) The appellants did not satisfy the Court that they are able to pay their debts. The appeal fails and is dismissed with costs.
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